Rural Stagnation and Social Mobilization

Odría imposed a personalistic dictatorship on the country and
returned public policy to the familiar pattern of repression of the left
and free-market orthodoxy. Indicative of the new regime's hostility
toward APRA, Haya de la Torre, after seeking political asylum in the
Embassy of Colombia in Lima in 1949, was prevented by the government
from leaving the country. He remained a virtual prisoner in the embassy
until his release into exile in 1954. However, along with such
repression Odría cleverly sought to undermine APRA's popular support by
establishing a dependent, paternalistic relationship with labor and the
urban poor through a series of charity and social welfare measures.

At the same time, Odría's renewed emphasis on export-led growth
coincided with a period of rising prices on the world market for the
country's diverse commodities, engendered by the outbreak of the Korean
War in 1950. Also, greater political stability brought increased
national and foreign investment, particularly in the manufacturing
sector. Indeed, this sector grew almost 8 percent annually between 1950
and 1967, increasing from 14 to 20 percent of gross domestic product (GDP). Overall, the economy experienced a prolonged period of
strong, export-led growth, amounting on average to 5 percent a year
during the same period.

Not all Peruvians, however, benefited from this period of sustained
capitalist development, which tended to be regional and confined mainly
to the more modernized coast. This uneven pattern of growth served to
intensify the dualistic structure of the country by widening the
historical gap between the Sierra and the coast. In the Sierra, the
living standard of the bottom one- quarter of the population stagnated
or fell during the twenty years after 1950. In fact, the Sierra had been
losing ground economically to the modernizing forces operative on the
coast ever since the 1920s. With income distribution steadily worsening,
the Sierra experienced a period of intense social mobilization during
the 1950s and 1960s.

This was manifested first in the intensification of rural- urban
migration and then in a series of confrontations between peasants and
landowners. The fundamental causes of these confrontations were
numerous. Population growth, which had almost doubled nationally between
1900 and 1940 (3.7 million to 7 million), increased rapidly to 13.6
million by 1970. This turned the labor market from a state of chronic
historical scarcity to one of abundant surplus. With arable land
constant and locked into the system of latifundios, ownership-to-area ratios deteriorated sharply,
increasing peasant pressures on the land.

Peru's land-tenure system remained one of the most unequal in Latin
America. In 1958 the country had a high coefficient of 0.88 on the Gini
index, which measures land concentration on a scale of 0 to 1. Figures
for the same year show that 2 percent of the country's landowners
controlled 69 percent of arable land. Conversely, 83 percent of
landholders holding no more than 5 hectares controlled only 6 percent of
arable land. Finally, the Sierra's terms
of trade in agricultural foodstuffs steadily declined
because of the state's urban bias in food pricing policy, which kept
farm prices artificially low.

Many peasants opted to migrate to the coast, where most of the
economic and job growth was occurring. The population of metropolitan
Lima, in particular, soared. While standing at slightly over 500,000 in
1940, it increased threefold to over 1.6 million in 1961 and nearly
doubled again by 1981 to more than 4.1 million. The capital became
increasingly ringed with squalid barriadas (shantytowns) of urban migrants, putting pressure on the
liberal state, long accustomed to ignoring the funding of government
services to the poor.

Those peasants who chose to remain in the Sierra did not remain
passive in the face of their declining circumstances but became
increasingly organized and militant. A wave of strikes and land
invasions swept over the Sierra during the 1950s and 1960s as campesinos
demanded access to land. Tensions grew especially in the Convención and
Lares region of the high jungle near Cusco, where Hugo Blanco, a
Quechua-speaking Trotskyite and former student leader, mobilized
peasants in a militant confrontation with local gamonales.

While economic stagnation prodded peasant mobilization in the Sierra,
economic growth along the coast produced other important social changes.
The postwar period of industrialization, urbanization, and general
economic growth created a new middle and professional class that altered
the prevailing political panorama. These new middle sectors formed the
social base for two new political parties--Popular Action (Acción
Popular--AP) and the Christian Democratic Party (Partido Demócrata
Cristiano-- PDC)--that emerged in the 1950s and 1960s to challenge the
oligarchy with a moderate, democratic reform program. Emphasizing
modernization and development within a somewhat more activist state
framework, they posed a new challenge to the old left, particularly
APRA.

For its part, APRA accelerated its rightward tendency. It entered
into what many saw as an unholy alliance (dubbed the convivencia,
or living together) with its old enemy, the oligarchy, by agreeing to
support the candidacy of conservative Manuel Prado y Ugarteche in the
1956 elections, in return for legal recognition. As a result, many new
voters became disillusioned with APRA and flocked to support the
charismatic reformer Fernando Belaúnde Terry (1963-68, 1980-85), the
founder of the AP. Although Prado won, six years later the army
intervened when its old enemy, Haya de la Torre (back from six years of
exile), still managed, if barely, to defeat the upstart Belaúnde by
less than one percentage point in the 1962 elections. A surprisingly
reform-minded junta of the armed forces headed by General Ricardo Pérez
Godoy held power for a year (1962-63) and then convoked new elections.
This time Belaúnde, in alliance with the Christian Democrats, defeated
Haya de la Torre and became president.

Belaúnde's government, riding the crest of the social and political
discontent of the period, ushered in a period of reform at a time when
United States president John F. Kennedy's Alliance
for Progress was also awakening widespread
expectations for reform throughout Latin America. Belaúnde tried to
diffuse the growing unrest in the highlands through a three- pronged
approach: modest agrarian reform, colonization projects in the high
jungle or montaña, and the construction of the north- south Jungle
Border Highway (la carretera marginal de la selva or la
marginal), running the entire length of the country along the
jungle fringe. The basic thrust of the Agrarian Reform Law of 1969,
which was substantially watered down by a conservative coalition in
Congress between the APRA and the National Odriist Union (Unión
Nacional Odriísta--UNO), was to open access to new lands and production
opportunities, rather than dismantle the traditional latifundio system.
However, this plan failed to quiet peasant discontent, which by 1965
helped fuel a Castroite guerrilla movement, the Movement of the
Revolutionary Left (Movimiento de la Izquierda Revolucionaria-- MIR),
led by rebellious Apristas on the left who were unhappy with the party's
alliance with the country's most conservative forces.

In this context of increasing mobilization and radicalization, Belaúnde
lost his reformist zeal and called on the army to put down the guerrilla
movement with force. Opting for a more technocratic orientation
palatable to his urban middle class base, Belaúnde, an architect and
urban planner by training, embarked on a large number of construction
projects, including irrigation, transportation, and housing, while also
investing heavily in education. Such initiatives were made possible, in
part, by the economic boost provided by the dramatic expansion of the
fishmeal industry. Aided by new technologies and the abundant fishing
grounds off the coast, fishmeal production soared. By 1962 Peru became
the leading fishing nation in the world, and fishmeal accounted for
fully one-third of the country's exports.

Belaúnde's educational expansion dramatically increased the number
of universities and graduates. But, however laudable, this policy tended
over time to swell recruits for the growing number of left-wing parties,
as economic opportunities diminished in the face of an end, in the late
1960s, of the long cycle of export- led economic expansion. Indeed,
economic problems spelled trouble for Belaúnde as he approached the end
of his term. Faced with a growing balance-of-payments problem, he was
forced to devalue the sol in 1967. He also seemed to many nationalists
to capitulate to foreign capital in a final settlement in 1968 of a
controversial and long-festering dispute with the International
Petroleum Company (IPC) over La Brea y Pariñas oil fields in northern
Peru. With public discontent growing, the armed forces, led by General
Velasco Alvarado, overthrew the Belaúnde government in 1968 and
proceeded to undertake an unexpected and unprecedented series of
reforms.